Why is a Home Loan Balance Transfer a Great Way to Acquire Extra Funds?

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Why is a Home Loan Balance Transfer a Great Way to Acquire Extra Funds?
Why is a Home Loan Balance Transfer a Great Way to Acquire Extra Funds?

New Delhi : A home loan balance transfer is a process where you transfer the remaining principal amount of your original home loan to a new lender to benefit from better repayment terms. There are several reasons why you might opt for a balance transfer. You may opt for it to reduce the effective rate of interest, to change the tenor or other beneficial terms according to your preference. Borrowers even transfer their home loan to enjoy additional insurance coverage or to avail a top up loan on the existing loan.

A balance transfer is an excellent way to acquire additional funds in the form of a top-up loan. It offers additional funding over and above your existing home loan. You are almost always likely to avail a top-up during balance transfer as the price of your property increases over time.

Availing additional funds over your home loan is a hassle-free and quick process. You only have to continue repaying the primary loan for a minimum qualifying period, usually spanning from 6 months to 1 year, to be eligible for a balance transfer. Also, a history of timely repayments on your existing loan increases your creditworthiness amongst the lenders.

Access to Additional Funds

When borrowers opt for home loan balance transfer, the new lender evaluates the market value of the mortgaged property to decide the risk involved. Usually, the allowed amount of a top-up credit usually stays within 70% to 75% of the present market value of the mortgaged property minus the outstanding loan amount.

Companies like Bajaj Finserv offer attractive interest rates, with additional top-up credits of up to Rs. 50 Lakh on a Home Loan transfer. Moreover, you can enjoy a transparent borrower-friendly policy, like zero fees on part and full pre-payment, customisable insurance policies to protect your family, and online account management to access your loan account from anywhere.

Reasons You can Avail a Top-up Credit

Unlike home loans, top up loan come without any end-use restrictions, meaning you can use it for your personal or professional requirements. You can fund large scale family occasions, finance higher education, purchase expensive appliances like TV, air conditioner, fridge, etc.

Moreover, you can also gain tax benefits if you use the credit to construct or purchase your residential property. You can get a tax exemption of up to Rs. 30,000 on interest repayments, which can reduce your financial burden further. You only have to produce the necessary documents showing that the funds were used for the designated purposes to claim the benefits.

However, you cannot use the funds from a top up loan for any speculative investments like share market or trading. In such scenarios, a lender may insist on an undertaking on the proposed use of the credit from you.

Advantage of a Top-up Credit on a Balance Transfer

Top-up advances over existing home loans are more viable as an option to avail additional funds instead of a new line of credit. The rate of interest on top up loan is  lesser than other unsecured loans as the borrower already has the property mortgaged with the lender via the existing home loan. Moreover, the larger amount is divided into longer tenors, which reduces the amount you pay as EMIs.

Thus, home loan balance transfer is a great method to obtain additional funds at an affordable home loan interest rate. Determine your suitable EMI with an online home loan EMI calculator and go through the available options to select the best lender for a home loan transfer, and you will benefit significantly from it.

Watch the video to know more about home loan transfer: